Why Is Encana (ECA) Down 6.3% Since the Last Earnings Report?
It has been about a month since the last earnings report for Encana Corporation ECA. Shares have lost about 6.3% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Encana's Q2 Earnings & Revenues Top Estimates, Up Y/Y
Encana Corp. reported second-quarter 2017 operating earnings of $0.18 per share, ahead of the Zacks Consensus Estimate of $0.04. Further, the bottom line improved from the year-ago period earnings of $0.10 per share. Improvement in the top line, higher realized prices and reduction in the costs lead to better results.
Quarterly revenues of $1,083 million came above the Zacks Consensus Estimate of $773 million. Moreover, revenues were 197.5% higher than the prior-year figure of $364 million.
Production & Prices
Quarterly natural gas production declined approximately 19% year over year to 1,146 million cubic feet per day, while liquids production fell 5% year over year to 124.9 thousand barrels per day.
Encana's realized natural gas price were $2.56 per thousand cubic feet, up 37.6% from the year-ago quarter level of $1.86. Meanwhile, liquids price rose to $41.97 per barrel from $38.47 in the second quarter of 2016, reflecting an increase of 9%.
Costs & Expenses
Total operating expenses reduced by 40.3% from second-quarter 2016 to $762 million. The decline is primarily attributed to the reduction in impairment charges.
Specifically, Encana reported operating costs of $113 million for the reported quarter, 16% lower than the year-ago quarter level. Also, transportation and processing expenses fell 15% to $206 million. Administration and depreciation charges were down by 60% and 16%, respectively.
Capital Spending and Balance Sheet
Encana's capital investments during the quarter were $415 million. As of Jun 31, 2017, cash and cash equivalent was $395 million and long-term debt was $4,198 million. This, in turn, represents a debt-to-capitalization ratio of 38.2%.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been four revisions higher for the current quarter compared to one lower. In the past month, the consensus estimate has shifted upward by 19.4% due to these changes.
Encana Corporation Price and Consensus
Encana Corporation Price and Consensus | Encana Corporation Quote
VGM Scores
At this time, the stock has a poor Growth Score of F, however its Momentum is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for momentum based on our styles scores.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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